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Microsoft Shares Its Recipe for Zunes Secret Sauce

Microsoft's entertainment and devices chief, Robbie Bach, warns Wall Street analysts not to expect profitability from the company's music player or Xbox for another year or two. (Microsoft Watch)

REDMOND, Wash.—Microsoft is planning to invest "hundreds of millions" and lose money through 2008 to make its recently announced Zune portable media player a success.

Robbie Bach, president of Microsofts Entertainment and Devices division, shared more details about Microsofts vision for its iPod competitor with Wall Street analysts and press attending Microsofts annual Financial Analyst Meeting here on July 27.

Bach leads many of the consumer-focused businesses at Microsoft. Gaming, TV, music, video, mobile devices, home productivity and other entertainment-focused products and services are all part of his organization.

"Our secret sauce for tying all of these together is community and services," Bach said. "Services is a cornerstone to what we are doing."

Bach and other Microsoft executives speaking at FAM pointed to Microsofts Xbox Live online service and community strategies as the model other parts of the company are striving to emulate.

When Microsoft launched the first Xbox console, the "attach rate" for Xbox Live was 10 percent. Currently, the attach rate for Xbox Live with Xbox 360 consoles is 60 percent.

There have been more than 34 million downloads from Xbox Live Marketplace, Bach said. Microsoft believes it will be able to double the number of registered Xbox Live members from 3 million to 6 million within the next 12 months, he added.

Microsoft plans to expand its Xbox Live Arcade presence in the coming year; to add music and movie downloads to Xbox Live Marketplace; to launch a Webcam for Windows Live, as part of an "Xbox Live Vision" campaign; and to more tightly integrate advertising into games, Bach added.

/zimages/4/28571.gifRead the full story on Microsoft Watch: Microsoft Shares Its Recipe for Zunes Secret Sauce

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